The Fuse
Like yesterday futures are down a bit on some heavier selling overseas but more likely responding to the lack of liquidity in markets. We often see stocks re-positioning at the start of the month and yesterday flows came into tech, we’ll see if that continues today.
Interest Rates are pulling down as bond buyers are back in the game. We saw good strength in long bonds overnight and yesterday with high yield, spreads are tightening so this market is solid. Fed futures see no cut or hike coming at the next meeting in two weeks.
Markets are lower but overseas the picture was mixed. In Europe, the STOXX sported a minor gain paced by Germany and France, the FTSE in England was up the same amount. Crude oil is up modestly again while gold is taking a breather as is silver. German 10 yr bund yields declined 3bps as did US 10 YR treasury yields. Meanwhile in Asia stocks were mixed with Japan down .1% but Hong Kong and China both sporting nice wins.
Earnings last night from Credo were very strong, the stock ripped higher and put out very strong guidance. This morning Dollar General posted a nice quarter but expanded its range. Signet and Ferguson also with strong numbers. Tonight we hear from Crowdstrike, Hewlett Packard, Guidewire and Asana.
Back from the weekend buyers were in no mood to get long at the open. In fact, heavy selling took place not long after but the search for a low was successful. Yesterday was the first trading day of the month and that often (not always) means strong money flows into stocks. That did not happen mostly until some late day shopping got many traders interested in picking up bargains. Lots of data out this week so we’ll have to play it cautiously.
Breadth was weak once again but not too damaging to the market trend on the day. In fact, the breadth finished well off the worst levels of the day and did make a run to the even mark. Oscillators though were down by days end. New highs just not making a move on the new lows, this indicator remains in neutral territory.
Volume printed quite a bit lower than late last week, and with the market rallying that is a bit of concern. However, I’m willing to give the bulls the benefit of the doubt ONLY because of the lows hitting on good turnover early in the session. That seemed to be an overflow from the end of month, and herein we could have seen the sellers finished up before the jobs report. Further, we often see money flows come in at the start of the month.
The indices started out weak but tested some lower support early in the day and bounced all session long. That is actually a pretty strong bullish characteristic. Nasdaq was solid all session long too, with the small caps lagging due to higher rates. That continues to be a hindrance to the IWM, but if we suddenly see bond buyers show up we may see IWM pentrate some resistance levels.
The Internals
What’s it mean?
The internals were dragging all day long but did rise to their best levels of the day at the closing bell. TICKS were mostly green especially towards the end of the day. ADSPD ran up to the zero line, so much for effort! VIX did manage to close lower, so a win for the bulls. Just nothing though from VOLD or ADD, simply a day where markets churned.
The Dynamite
Earnings This Week:
- Tuesday:DG, NIO, SIGN, OLLI, NESR, CRWD, HPE, GWRE, ASAN, MAMA, HQY
- Wednesday:DLTR, SCM, TTGT, THO, GCO, MDB, FIVE, PVH, PL, CHPT, VRNT, BARK
- Thursday:CIEN, CBRL, LE, BFR, TTC, VSCO,DLTH, AVGO, DOCU, LULU, BRK, IOT, WOOF, ZUMZ, BRZE
- Friday:GIII, ABM, FCEL
Economic Data:
- Tuesday:Factory orders, JOLTS, Fedspeak
- Wednesday:ADP, services PMI final, ISM services, fed beige book, Bostic/Cook at Fed listens event
- Thursday:Jobless claims, trade deficit, productivity, fed speak
- Friday:May jobs report, consumer credit
Fed Watch:
Lots of Fed speakers out this week before the next Fed meeting which falls on June 18th. The committee last suggested a couple of rate cuts in 2025 and may be willing to stretch it out further following some positive reads on inflation. However, growth is still pretty strong and the looming inflation that is coming from tariffs is likely to derail any set plans of execution.
Stocks to Watch
Interest Rates – We remain focused on where rates are moving, this past week saw the 10 yr falling for the first time in awhile. That is important as treasury and the rest of government would like to see yields fall further towards 4% or lower.
Trade – Last week with some ‘easing’ against the EU the stock market rallied sharply. If there is any news to move markets we’ll be paying close attention.
Labor – The May report looms large on Friday as expectations are high for another strong report. Consensus says 125K but that would be lower than the prior month.
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